Green Courte closes third fund

The Lake Forest, Illinois-based private equity investment firm has closed on $406.9 million in commitments for its latest real estate fund, which will focus on niche investments.

Green Courte Partners has closed on its third fund, Green Courte Real Estate Partners III, exceeding its initial target of $350 million. The firm will be leveraging $406.9 million in equity commitments to invest about $1.2 billion in niche real estate, particularly manufactured-housing communities and parking facilities, in the US and Canada.

Nearly all of the investors from Green Courte’s prior two funds, as well as several new institutional investors, invested in Green Courte Real Estate Partners III. About a third of the investors in the latest fund are endowments, universities and hospitals, while 20 percent are foundations and 15 percent are tax-exempt organizations, said James Goldman, vice chairman and chief investment officer. The remainder of the commitments came from high-net-worth individuals and families and other taxable investors, he noted, adding that all are long-term, value-added investors focused on total returns.

The new fund will follow the same strategies as the firm’s first two funds, the $120 million Green Courte Real Estate Partners, which closed in 2004, and Green Courte Real Estate Partners II, which closed on $262.5 million in 2007. Together, those two funds have invested more than $1.1 billion in niche real estate.

In discussing the firm’s investment strategy, Goldman noted that Green Courte has shied away from traditional real estate, such as office buildings. Instead, “we’ve decided to focus on [sectors] where there are smaller-cap assets, less competition and often less ongoing capital expenditures,” he said. That’s “where we think we have a competitive advantage.”

Green Courte will be looking to buy manufactured housing in markets where there’s a cost advantage relative to traditional housing – typically in areas where housing costs are high – and parking facilities in urban areas and other markets where parking is valuable, said Goldman. The firm, which typically holds assets for 10 to 12 years, will be seeking net returns of 15 percent with its third fund.

Green Courte Real Estate Partners III, which launched last year, held a first close on about $120 million on 30 June 2010, according to documents filed with the US Securities and Exchange Commission.